My goal in this article is to dispel the illusion that Virginia Mines (OTCPK:VGMNF) is a safe way to get exposure to gold. The company has several qualities that would lead one to such a conclusion.
- Virginia Mines has thwarted the downtrend in gold-related equities trading up roughly 3% YTD. By comparison the Market Vectors Gold Miners ETF (GDX) has lost nearly half of its value.
- Virginia Mines has $40 million in cash and no debt.
- Virginia Mines employs the royalty business model, which minimizes risk insofar as it has fixed costs while mining companies have to deal with fluctuating mining costs and mine development/shutdown costs. Furthermore, the company's primary royalty--that on the Eleonore project
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